Commentary

A1.124 The test of chargeability to tax

Administration and compliance

A1.124 The test of chargeability to tax

A1.124 The test of chargeability to tax

The test of chargeability to tax is the quality of a receipt in the recipient's hands. Thus, a series of annual payments paid out of capital is within the charge to tax on annual payments imposed by ITTOIA 2005, Pt 5 (former Schedule D Case III)1. Equally, however, not all annual payments have the quality of income. Thus, if an enduring capital asset is sold for a fixed capital sum no income element enters into the transaction2; even if the contract provides that the fixed capital sum is to be paid in a

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